Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from Matt Sheerin.
Matt Sheerin – Thomas Weisel Partners
Yes, thank you. Just my question regarding your guidance, I understand the revenue guidance makes sense given the book-to-bill. But you also in the press release talked about flat – expectation for flat gross margin in December. How was that possible if revenues going to be down so much? Is it a mix issue?
Gerald Paul
It’s mix, but it’s also cost reduction. It’s a combination of a couple of things. I’ll try to explain that in capacitors in particular, we’ve exposed to a write-down of palladium, which impacted the quarter but will help us in the next quarter, for instance. But they are ongoing improvements. So we talk to flat to slight down in between more flat gross margins.
Matt Sheerin – Thomas Weisel Partners
Would you expect in your active business, given that revenue is going to be off show sharply that gross margin would actually down for Siliconix and for the discrete business?
Gerald Paul
I would say, in Siliconix, we expect slightly down. On the other hand, we expect some recovery in the passive side.
Matt Sheerin – Thomas Weisel Partners
Okay. And then –
Gerald Paul
And we are talking relative gross margins percent, of course, right.
Matt Sheerin – Thomas Weisel Partners
I understand. And then you talked about the euro’s impact on your revenue, could you also talk about, Dr. Paul, the impact on your costs? I know you have a lot of manufacturing operations in Europe, although it’s not all in Euro. So could you talk about currency impact overall on your business both from a revenue standpoint and a cost standpoint?
Gerald Paul
The dollar-euro ratio impact only the top line in Vishay. Our distribution of costs is approximately the same distribution as the distribution of sales in these two currencies. That means in the first approximation it’s neutral. There is no effect. On the other hand, that’s different, for instance, for currencies like the Israeli shekel. In this case, we have just costs and we are exposed to a strengthening of the shekel. But in terms of dollar-euro, our bottom line, our operating margin, just approximations [ph] independent.
Matt Sheerin – Thomas Weisel Partners
Okay. And approximately what percentage of your cost from Israel?
Gerald Paul
Well, I don’t know by heart, but we had about 4,000 people in Israel, you see. So it’s a very substantial number, and year-over-year we are going to experience a negative impact of the Israeli shekel to the tune of 35 million to 40 million year-over-year from 2007 to 2008.
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